Tricky Corporate Terminology Tripping You Up?

What the heck is an operating agreement? What’s the difference between a member and a manager? What is double taxation, and how can I avoid it?

Corporate terminology can be tricky, but it’s important that you understand all the lingo being used in your documents and agreements. Here’s a brief list of commonly confusing corporate terminology and their definitions.

Business License

(1) In New York, a county-level business run by an individual (a sole proprietorship) or individuals (a partnership).

(2) In general, a term broadly used to indicate any business licenses or permits required by the state or local governments.

Corporate Minutes

An record of corporate meetings and the actions the corporate board takes during those meetings. A legal requirement.

Double Taxation

The common term for the way a C Corporation is taxed: once at the corporate level, and again on the individual level once profits have been distributed as salary.

Incorporate

To form a corporation. The Incorporator is the person who executes the formation document. [Compare this with the definition for “Organize.”]

Notary / Notarized Signature

Required on many business documents; a notary public will record your ID, witness you sign the form, then add his or her own seal and signature to the form to legally certify your signature. Remember not to sign the form until directed to by your notary. (Notaries can be found at most banks and financial institutions.)

Organize

To form an LLC, or limited liability company. The Organizer is the person who executes the formation document.

[Recommended Reading: Expanded list of corporate definitions from Click&Inc]